Looking to expand your investment empire? Look no further, with an Absa Buy to Let Home Loan!

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If you feel like it’s time to expand your story and write your next property investment chapter, we absolutely agree. Whether your portfolio is overflowing with properties or in need of a renovation, we believe in its story.

As a seasoned investor, you probably already know that buying to invest is a strong investment strategy – one that allows you to reap numerous benefits while building wealth and keeping inflation at bay.

However, your property investment journey may have become sluggish and static over the years. Perhaps you’re struggling to manage multiple properties at once, or maybe you’re finding it difficult to finance the expansion of your portfolio.

Through the Absa Buy to Let Home Loan, you get a comprehensive suite of tools and assistance to navigate the expansion process. These features are designed to help you write the next chapter of your property portfolio story.

Writing a new chapter in the current property landscape

In preparation for purchasing your next property, it’s important to have a grasp of the latest industry developments. When asked about the latest trends, Dion Naidoo, Portfolio Manager at Absa Home Loans, and Waldo Marcus, Industry Principal at Tenant Profile Network (TPN) from MRI Real Estate Software, weighed in.

In 2024 so far, the property market has some noteworthy trends and takeaways, including:

• Trends in rentals versus purchases

Interestingly, both Naidoo and Marcus highlighted the fact that in Q1 of 2024, residential rental vacancies dropped to the lowest levels since 2016. According to the TPN Vacancy Survey Report 2024 Q1, “Nationally, 4.42% of rental properties were vacant in the first quarter of 2024, compared to 6.69% in the previous quarter”.

Fewer vacant properties translate into an increase in tenant occupancy, articulating the fact that there is currently a higher demand for rental properties. As a result, there has been increased demand. However, Marcus notes that “new stock entering the market has slowed and been sluggish in 2023. Yet there’s been a gradual shift with more supply coming online, to speak to the high demand.” 

The favouring of renting properties is perhaps unsurprising given that interest rates have been at a 15-year high for six consecutive quarters. In such a high interest rate cycle, demand for purchasing properties has decreased due to affordability and cost of living crunches. As such, Marcus adds that “as interest rates come down, there may be a bigger appetite to purchase property” in the future.

• Investor preferences

According to Marcus, “We’re seeing more, smaller micro-landlord investors entering the market”. In the span of a decade, smaller investors (those with one to two properties in their portfolio) have increased from 50.97% of the total investment population in 2014 to 57.47% in 2024. More of the investment population is evidently holding smaller portfolios, as those with 10-plus properties decreased from 5.59% in 2014 to 4.84% in 2024.

Much like smaller portfolios being on the rise, so is the percentage of properties owned by women. Read more about our specifically women-tailored property insights here: Women in property: Want to hone your property investment skills?. Just like the momentum experienced by women investors over the years, gross yields overall continue on an upward trend. Marcus highlighted the fact that since the wake of the pandemic in 2021, gross yields for sectional titles increased to 10.62%, while gross yields for full title properties increased to 7.44%.

Finally, it’s also interesting to note that property preferences among buyers play an important role in purchasing as “the investor is purchasing to speak to their own interests”.

A Buy to Let business

For many seasoned investors, investing in property is not just a side hustle; it’s a fully fledged business operation. This type of investment strategy enables you to fully realise your financial aspirations.

Financing and affordability are the two main obstacles that even the most seasoned investors may encounter. To help you overcome these challenges, our Absa Buy to Let Home Loan offering comes with numerous benefits. At its core, this offering allows experienced investors to purchase their next investment property without having to forfeit and sell an existing one. This allows you to successfully add properties to your portfolio without losing that hard-won momentum.

More tips for portfolio expansion

Another important tip to take into consideration is that a minimum of 15% return on cash invested in purchasing or renovating a property, should be your consistent target. This 15% marker provides investors with a useful threshold that can be used to analyse the viability of investment strategies.

Beyond investment strategies, profits and returns, the management of your properties is pivotal to the success of your portfolio. This is why our bespoke business transactional accounts – which form part of our Business Evolve range – help you to better manage your rental income and expenses.

In addition, you get the chance to grow your knowledge and network as a property investor with a free, six-month Foundation Membership to the SA Property Investors Network (SAPIN). This includes access to events, content webinars and resources.

Extra perks for seasoned investors

So, why is expanding your property empire easy with Absa’s industry-leading Buy to Let Home Loan? Because you’ll have access to a variety of value-added products that help you simplify your property management journey, including:

• Discounted rates on tenant screening services: Access streamlined finding, vetting and managing of reliable tenants through TPN. Get 25% discount on its InvestorReport and LeasePack.
• TPN Residential LeasePack: This includes a comprehensive set of documents, including up-to-date leases. According to Markus, these are the most widely used lease templates in the country as they are both cost-effective and compliant with the latest industry regulations.
• TPN InvestorReport: This comprehensive report informs you of everything that you need to know about a suburb’s rental market dynamics to support your residential property investment decision. It includes demographic information, a rental price index and good-standing rental indicators linked to a specific area. For more information, visit TPN.
• Property investment knowledge: Benefit from a free, six-month Foundation Membership that includes invitations to events and content webinars, as well as access to resources, among other benefits, through SAPIN.
• Future rental income: Applicants who own one or more residential properties may be eligible to include future rental income in their credit affordability assessment. For those looking to buy a second or additional property for rental purposes (where no lease contract/agreement exists), a percentage of the projected future rental income has positive credit implications. Naidoo explains that “this can help applicants to qualify for the loan amount that’s being requested or for a higher loan amount, thereby providing greater choice for them to purchase a higher priced property”.
• Affordability determination: We’ll determine your affordability based on the income declared on the Home Loan application received, which must indicate existing and/or future rental income.
• Existing rental income: We use the existing rental income being collected by the seller in the affordability assessment of the purchaser’s application. The projected income from tenants helps to improve the applicant’s credit affordability assessment. This assumes that the tenants will continue renting the property per the original lease agreement.

You get even more when you choose to write your story with Absa

• Loan-to-Value finance: Get an industry-leading loan to finance your investment. This is also highly beneficial for tax purposes, as debt can be used to grow property portfolios and, according to Naidoo, “expenses for the maintenance of rental properties can be claimed at income tax time”.
• Interest rate concession: Unlock a 0.25%* interest rate concession (when you open a new Absa Cheque Account).
• Flexible interest rates: Access a variable or fixed interest rate, based on your unique needs.
• MultiPlan: Enables you to access equity and structure the loan over a shorter term.
• Home insurance: Get comprehensive homeowner’s insurance that protects you against unforeseen events.
• Absa Law For You: Gain access to legal assistance whenever you need it, with packages tailored to your needs. For more information, call 0860 227 257.
• Financial planning expertise: Email Virtualadviser@absa.co.za to connect with our financial advisers for a full financial needs analysis, a review of your will, and retirement planning. Also, discuss tailor-made insurance solutions to ensure your investment strategy is on the right path.

Whether you have two existing properties or 10 on the horizon, with an industry-leading Absa Buy to Let Home Loan, expanding your property empire is easy. It’s time to make big moves, together!

We believe in your story.

Ready to write another chapter with us?

Learn more

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